The Morning Ledger: Median Wages Finally Jump After Lackluster Years

Good morning. Are you a typical family? Census Bureau data released Tuesday indicates median household income jumped 5.2% from last year, the best gain since the survey began nearly five decades ago. That said, at the midpoint of the data set, we’re still 1.6% below 2007 and 2.4% below the 1999 zenith, the Journal reports on today’s front page. It is the first significant boost after seven years of stagnant-to-declining earnings. Will the newfound prosperity translate into consumer spending, reduced corporate earnings, or both, or neither? Stay tuned.

The figures show how several years of robust employment growth, including 2.4 million people who gained full-time work last year, helped regain ground lost after an especially wrenching downturn, particularly for lower-income households. Longer hours, higher wages and lower inflation also have contributed to the improvement. Is a sustained upturn under way, or will these gains peter out as the economy nears full employment, especially given a continuing slide in measured worker productivity.

Meanwhile, CFO Journal has written extensively about the potential magnitude, or lack thereof, from changes coming next month requiring prime institutional money-market funds to adopt a floating net asset value, compared to a traditional fixed NAV. This puts treasurers and finance chiefs in a bind, because corporate charters are sometimes unclear on whether the potential for loss of principal is acceptable, plus it might further crimp the already low returns for corporate cash. Bloomberg writes about a worst-case scenario, where the exodus from previously fixed-rate, prime-money funds might reach $300 billion, which could mean corporate commercial paper and other short-term debt, a key source of corporate funding, will lose some of their biggest customers.

CFO JOURNAL TODAY

Perrigo invited activists.Perrigo Co.’s successful defense against rival Mylan NV’s takeover offer set the table for activists like Starboard Value LP to challenge its management, Richard Teitelbaum reports. “It had to be a matter of time before someone like Starboard or someone else showed up,” said Minor Myers, a professor at Brooklyn Law School. “They are channeling the anger of the Perrigo shareholders.”

New Tiffany CFO may be a shrewd move. Tiffany & Co.’s appointment of an industry outsider as its new finance chief is a clever move which could help the struggling luxury jeweler regain lost ground, according to analysts and headhunters. It hired Mark Erceg, former CFO of Canadian Pacific Railway Ltd., to become its CFO, effective Oct. 18. The fact that Mr. Erceg hasn’t worked in luxury retail before shouldn’t present a challenge to him becoming a successful CFO at Tiffany.

THE DAY AHEAD

Cracker Barrel may come back to earth.Even Cracker Barrel Old Country Store Inc. isn’t immune to the macroeconomic forces facing restaurants, and there’s no audiobook for that. The down-home eatery has so far bucked difficult industry trends, including warnings of a possible “restaurant recession.” Cracker Barrel has raised its full-year earnings guidance twice so far this year, benefiting from higher average customer checks and menu prices, but flying high leaves it vulnerable.

CORPORATE NEWS

Wells Fargo CEO John Stumpf.

Justin Sullivan/Getty Images

All better; their fault.As public and congressional pressure mounted on Wells Fargo & Co. executives, its top two bankers had an explanation Tuesday for allegedly illegal sales practices across the company: It was employees’ fault. Chief Executive John Stumpf defended the firm and the efforts it had taken to stop the behavior. “There was no incentive to do bad things,” Mr. Stumpf said in an interview with The Wall Street Journal.

Mylan executive compensation near top. Mylan NV’s executives had the second-highest compensation among its peers over the past five years, according to a Wall Street Journal report. That’s somewhat unusual because Mylan has a small presence in the U.S., and companies typically try to yoke their pay to similar-size peers.

Monsanto to pull trigger. Germany’s Bayer AG will likely announce that U.S.-based Monsanto Co. will accept Bayer’s takeover bid, Reuters reports. It would mark the biggest deal of the year so far, and will likely be closely scrutinized by global regulators on both sides of the pond.

VW investors hurry to file more lawsuits before Sept. 19.Volkswagen AG investors are preparing to flood a German court with more lawsuits over the car maker’s emissions scandal to meet a deadline that lawyers say may be imaginary, according to Bloomberg. The Braunschweig Regional Court is bringing in extra staff for Monday, the first business day after the one-year anniversary of VW’s admission that it rigged its cars to cheat emissions tests. Shareholders who want to sue VW over their losses are concerned that the day may be the deadline to file.

Luxury stocks tanking after Richemont, Hermès updates.Richemont SA, the Swiss group behind Cartier and Montblanc, warned first-half profits are expected to be 45% lower this year, while its French rival Hermès International SCA effectively abandoned a medium-term target of 8% revenue growth, the Financial Times reports.

Three ships chartered to Hanjin sold.Three ships chartered to Hanjin Shipping Co. Ltd. have been sold and two more of vessels are up for sale, kicking off a fire sale sparked by the failure of the world’s seventh largest container shipper. According to Reuters, the bulk carriers were sold by lessors for a total of almost $39 million. Around $14 billion of cargo has been tied up globally as ports, tugboat operators and cargo handling firms worried about not being paid refuse to work for Hanjin, which filed for receivership on August 31.

Buffett loses after Wells Fargo drop. Warren Buffett had $1.4 billion wiped from his fortune Tuesday after Wells Fargo fell 3.3% as the fallout continued from revelations that bank employees had opened more than two million accounts without clients’ approval, Bloomberg reports. Berkshire Hathaway Inc., the lender’s biggest shareholder, fell 2%, causing the 86-year-old’s fortune to drop more than anyone else’s on the Bloomberg Billionaires Index.

Wells Fargo to scrap sales targets.The bank also made a move in an attempt to restore the faith of customers and investors after it paid a record fine for its staff signing up as many as 2 million people for accounts and credit cards without their knowledge, the FT reports. The bank has come under criticism, because while it fired 5,300 workers for the improper sales push, the executive in charge retired with a $125 million golden parachute.

REGULATION

Dennis Lockhart, president of the Federal Reserve Bank of Atlanta.

Bloomberg News

End of an era.Federal Reserve Bank of Atlanta President Dennis Lockhart, whose comments on the economy and monetary policy are seen by many as a reflection of the central bank’s consensus view, will step down in February. The Atlanta Fed on Tuesday said Mr. Lockhart, who has led the bank since 2007, is leaving to “pursue interests in public policy, civic work and private business.”

Former AIG boss set to go on trial. Former AIG Inc. boss Hank Greenberg went to trial in New York on Tuesday over a decade after civil charges were filed, the FT reports. He is accused of engineering bogus transactions to hide the insurance giant’s financial difficulties. The charges were filed in 2005, but Mr. Greenberg has said they have no merit.

FCA plans to ban ex-Barclays executive over misconduct.The British Financial Conduct Authority plans to ban a former top executive at Barclays PLC over an episode where media reports alleged he destroyed an internal report detailing a high-rolling corporate culture at the bank’s U.S. wealth division, the FT reports. Andrew Tinney, who left Barclays in 2013 in the wake of the allegations, is contesting the findings. The FCA could publish details about the case as early as Wednesday.

German bank sues former execs over tax deals.Germany’s HypoVereinsbank, a unit of Italy’s UniCredit SpA, earned a fortune from dubious tax deals until tax inspectors came knocking and forced the bank to pay almost €300 million in fines and repayments, Handelsblatt Global Edition reports. Now it is suing three former employees for compensation.

ECONOMY

We’re not gonna take it.A tripling of student debt over the past decade to more than $1.3 trillion has unleashed a torrent of Washington lobbying from outside the education sector, with various industries describing a “crisis” requiring federal intervention. Real-estate agents, farmers, architects, startup lenders, lawyers and tech companies have sent lobbyists to Capitol Hill over the past two years to push for legislation to forgive or at least reduce what workers and consumers owe on their student loans.

British retail bosses decline to discuss EU exit with Brexit minister.David Davis, the Brexit secretary, has been snubbed by U.K. retail bosses after he tried to call an industry meeting to discuss the pros and cons of exiting the European Union, the Guardian reports. Mr. Davis contacted retail chief executives last week to invite them to a roundtable planned for Thursday, but it is understood that no major industry bosses plan to attend.

CFO MOVES

JetBlue Airways Corp., the Long Island City, N.Y., airline, said Mark Powers will retire as finance chief at the beginning of November, and remain with the company for a year as a senior adviser. He has been with JetBlue for more than 10 years, and has been CFO since 2011. He will keep his salary of $425,000 a year and will receive cash payments of $120,000 through his remaining tenure. Treasurer Jim Leddy will serve as interim CFO.

Linde AG, a German industrial-gas company, said CFO George Denoke left in the wake of its failed, $60-billion merger with Praxair Inc., and CEO Wolfgang Büchele will not seek a new term next April when his contract expires. The two executives disagreed about plans for the merger. Mr. Denoke, who would have been sidelined, sided with labor representatives to oppose the deal. The deal crumbled because of culture clashes between Linde and U.S.-based Praxair.

The European Court of Auditors, the independent European Union auditor based in Luxembourg, named Germany’s Klaus-Heiner Lehne as its new president. Mr. Lehne will take over from Vítor Caldeira of Portugal on Oct. 1. Mr. Lehne is a former member of both the German and European parliaments.

The Morning Ledger from CFO Journal cues up the most important news in corporate finance every weekday morning. Send us tips, suggestions and complaints: maxwell.murphy@wsj.com. Get the free Morning Ledger emailed to you each weekday morning by clicking here, or at: http://on.wsj.com/TheMorningLedgerSignup

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